Moonrise Bakery applies factory overhead based on direct labor costs. The company incurred the following costs during the year: direct materials costs, $820,000; direct labor costs, $4,700,000; and factory overhead costs applied, $2,820,000.

1. Determine the companys predetermined overhead rate for the year. 2. Assuming that the companys $88,000 ending Work in Process Inventory account for the year had $37,000 of direct labor costs, determine the inventorys direct materials costs.